Wednesday, February 25, 2009

Dallas announces plan to fund improvements

The City of Dallas is proceeding with plans to create three special districts to pay for improvements and economic development using funds collected from taxes or assessments collected from property owners.

Creation of the districts would give developers authority to issue public debt and permit them to levy taxes to pay it back — powers that developers in Dallas previously have not had.

The districts, called municipal management districts, would be created in pockets in North Oak Cliff, west of the Trinity River, and land surrounding North Lake near Coppell.

The management districts would be a powerful tool to attract business, develop infrastructure, promote employment and encourage transportation, housing, safety and other improvements, said Karl Zavitkovsky, director of the Dallas Office of Economic Development. The districts would provide an independent financing mechanism for these functions, he said.

“They have some fairly significant powers, but there are also checks and balances,” Zavitkovsky said.

Creation of Municipal Management Districts, or MMDs, requires approval by the Texas Legislature. The Dallas City Council is set to vote Wednesday on a resolution supporting creation of the three districts.

The districts would include:

• North Oak Cliff ­— A 313-acre urban infill project being developed by Dallas-based Incap Fund in what’s being called the River District Area. It includes pockets roughly bounded by Davis Street on the south, Cockrell Hill Road on the west, Interstate 30 on the north and Zang Boulevard on the east.

• Trinity River West — A 342-acre site owned by investment company West Dallas Investments surrounding the westside connection point of the planned Calatrava Bridge. It’s roughly bounded by Commerce Street on the south, Sylvan Avenue on the west, Pueblo Street on the north and Beckley Avenue on the east.

• North Lake ­— A 942-acre site being developed by Lucy Billingsley, roughly bounded by Belt Line Road on the north and west, Hackberry Drive on the south, and Vista Circle and Lakebreeze Road to the east.

Incap’s North Oak Cliff project is planned as mixed-use development and envisions high-density work force housing near Dallas’ downtown, Uptown, Victory Park and Trinity River Urban Lakes project. Creating a management district there could fund a street car system along Davis Boulevard, connecting residents to downtown Dallas and the Dallas Area Rapid Transit light-rail system, city plans say.

An MMD in the area would also provide financing for enhanced landscaping and lighting along commercial corridors, green spaces and increased safety and security programs ,which would make the area more attractive for young urban professionals, according to the plans.

Few details were available on what, specifically, would be funded through MMDs in the other two proposed districts.

If the Legislature approves creation of the management districts, city council members would appoint a board to run it.

MMDs are self-governed but must be approved by the city in which they function. The districts may issue tax-exempt bonds but the bond debt is not city debt and does not count against the city’s bonding capacity. Bond issuances must be approved by the city council.

MMDs may levy property taxes, assessments or impact fees to support the bond debt in accordance with their approved service plans. Property tax increases must be approved by a majority of voters in the district.

Assessments must be requested by petition of affected property owners. State law provides that all property owners — residential and commercial — in an MMD are subject to assessment, but in practice, typically only commercial property owners are taxed, Zavitkovsky said. With assessments, property owners agree to pay a percentage of their assessed property value until a project’s cost is paid off.

MMDs provide supplemental services but do not replace the services provided by the city. They exist until dissolved by a petition of the property owners, a vote of the board or a resolution of the city council.

Houston has more than 20 MMDs, which tend to be effective in well-defined areas with strong real-estate markets but struggle in weaker submarkets that lack catalyst projects or a strong economic base, according to information gathered by Dallas city staffers and presented to the city’s Economic Development Committee.

Most property owners in Houston’s MMDs like the idea that revenue from assessments and impact fees will be reinvested in their targeted area, although some have complained about the extra tax, according to the information presented to the EDC.